Risk Management

Our Top Ten blog posts by readership in 2014.
This post was originally posted on June 23, 2014

In the past two decades while the world has experienced global integration, technological innovation, and economic reforms, there has also been financial turbulence and continuing environmental damage. As the world changes, a host of opportunities are constantly arising, and with them, appear risks both new and familiar. These risks range from the possibility of job loss and disease, to the potential for social unrest and natural disasters. This is the topic of a new World Bank Group MOOC illustrating how risk management can be used as a tool for development by helping to minimize crises but also unlocking important opportunities.

In the past two decades while the world has experienced global integration, technological innovation, and economic reforms, there has also been financial turbulence and continuing environmental damage. As the world changes, a host of opportunities are constantly arising, and with them, appear risks both new and familiar. These risks range from the possibility of job loss and disease, to the potential for social unrest and natural disasters. This is the topic of a new World Bank Group MOOC illustrating how risk management can be used as a tool for development by helping to minimize crises but also unlocking important opportunities.

For those who work and live in Washington DC, flying into Dulles airport at the end of a long journey only to be greeted by long queues at immigration is never easy. One hears a lot of complaints about immigration processes and it is human nature to talk about it when the government does something wrong rather than when things go right. Global Entry - an initiative of the US Government (Customs and Border Protection) - a neat way to avoid the long line - is getting it exactly right. I recently signed up for the Global Entry Program that allows travelers returning to the US, a quick entry back through fewer checks at immigration. In my case, I got through immigration at Washington Dulles in 15 minutes from landing to a taxi!

The Global Entry Program is a great example of using technology to spur innovation and efficiency in the public sector in the following ways:

The World Bank wants to speed up. To meet the needs of clients and find new solutions to development challenges its appetite for taking risks must change. Accountability mechanisms, like the Inspection Panel, are often accused of causing staff to become risk averse – of slowing down the speed. The Panel has been set up to give people affected by Bank-supported projects an avenue for raising their concerns, knowing that the complaint will be handled by a body independent of those who man age the project. We call it citizen-driven accountability. Does this slow down speed or does it allow for speeding up because it improves the braking system? Fast cars need good brakes.

The answer is not simply one or the other. The Panel has stated on several occasions that it recognizes risk-taking is an essential part of development work, and that the Bank needs to be able to take the risks that go along with innovation, and venture into challenging circumstances where risks and potential rewards may be high. Effective safeguard policies provide means to identify and manage risks, which at times may slow down speed and rightly so. At the same time, citizen-driven accountability helps to enable risk-taking by providing a safety net for affected people in the event that risks materialize.

There is probably no area of 'governance reform' work that is as technocratic and as ubiquitous as public financial management reform. It is where experts of different kinds - economists, accountants, auditors or all the above - work on improving the plumbing of governments, how revenues are collected and managed with efficiency and a minimum of leakage. Because the technical skills involved are deep and carefully honed over years of specialist training it is also an area where experts often seek to work in a politics- free zone by trying to ignore taking on the realities of each political context and just work on the plumbing. There is no doubt that a lot of good work is going on here, but there is also no doubt that a lot of the work is less effective than it might have been because interventions don't seek to work the politics of the initiative.